A critical component in building homes is the labor pool. The industry collapse sent many construction workers into other fields or to other locations. A similar trend occurred in the industries that make products for homes as purchases of building materials, appliances, flooring, and fixtures also crumpled.
Labor Shortage Problems Reacquiring trained and willing workers has presented a problem to rebuilding the industry. In a recent NAHB survey, builders rated challenges from the past year and those that face them in 2014. At the end of 2012, 30 percent of builders rated labor as a significant problem; by the end of 2013, that number rose to 53 percent. And 65 percent of builders expect the cost and availability of labor to be a major issue in 2014.
Another 2013 NAHB survey shows that the greatest shortages are in framers and carpenters, regardless of whether the builder is hiring an employee or a subcontractor. Builders coped with the limitations in several ways such as raising the home price, increasing wages, searching for labor in a wider geography, and slowing or turning down work.
Total residential construction employment peaked at 3.45 million workers in April 2006, when we were building 2 million homes per year. Employed residential construction workers dropped to 2 million in March 2011, when we were building about 500,000 homes. Construction dropped by more than 75 percent, but employment dropped by less than half. Many builders and subs kept their staff even though they didn’t have the same amount of work; some employees worked fewer hours. As construction revives, retained workers are working longer hours while firms wait to confirm a full recovery before committing to new hires.
From peak to trough, construction unemployment (residential construction unemployment is not broken out from all construction unemployment) rose from 6.5 percent to more than 20 percent. Since the trough, about 180,000 construction workers have returned to work, but the number of unemployed former construction workers fell by 725,000. Former construction workers found work in other industries or stopped working altogether. Even if the 180,000 expansion came from former construction workers, that still leaves 545,000 lost construction workers, most of whom either have been out of work for a while or have gotten another job and aren’t returning to home building.
These days, fewer young people are choosing construction. An emphasis on college and the collapse of the housing industry, as well as a decline in commercial construction activity, increased the diversion from a construction career to sexier careers in computers, electronics, and less cyclic businesses. Trade schools also have disappeared as the means to construction career paths. From 2005 to 2012, the share of construction workers age 20 to 24 fell from 10.7 percent to 6.7 percent, while the share 55 or older rose from 11.7 percent to 18.6 percent. Combined with the fall in construction workers, there are half as many 20 to 24 year olds in construction now as at the peak.
Wages on the Rise Construction workers earn near the upper end of the wage distribution. In 2012, the median weekly earnings for all full-time wage and salary workers was $768; $740 for construction and extraction occupations. While general weekly earnings rose 18 percent from 2005 to 2012, construction and extraction weekly earnings rose 22.5 percent.
As housing rebounds, it is hoped that labor will do the same. Builders will further raise wages and offer other benefits to attract workers, while state and local associations will try to attract and train more employees. The Home Builders Institute will continue to provide Job Corps—which offers construction training, employability skills education, and job placement services for youth ages 16 to 24—and other programs to bring more qualified workers into the industry.